MGM's Bankruptcy Plan Approved
NEW YORK (
) --
Metro-Goldwyn-Mayer's
prepackaged bankruptcy plan has been approved by a New York court
Under the plan, which the company expects to be effective by mid-December,
Spyglass Entertainment
chieftains Gary Barber and Roger Birnbaum will be appointed as chairmen and CEOs of MGM following its emergence from bankruptcy.
The company's lenders, including
Credit Suisse
(CS) - Get Report
and
JPMorgan Chase
(JPM) - Get Report
, will be able to swap more than $5 billion of debt for most of the equity in the new company.
"By dramatically reducing MGM's debt load and providing MGM with access to new capital, the reorganization plan ... will enable MGM to emerge from this process with a solid financial foundation and will position MGM to be a successful studio going forward," said the corporate-restructuring expert Stephen Cooper, who had been named co-CEO of the troubled entity.
About a month ago, the fabled motion-picture studio famous for its roaring lion announced that it had
come to an agreement with Carl Icahn
, the activist investor who currently holds about 18% of MGM's debt.
Icahn demanded several terms in the agreement, including a seat on the new MGM board. In addition, MGM will see changes in its corporate governance, including the ability of stockholders to call special meetings.
Spyglass will receive a 1% stake in MGM equity rather than the previously projected 5%.
--Written by Theresa McCabe in Boston.
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